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John ColthartJohn Colthart

John has made clients successful in every major market worldwide during his 17-year career in technology leading world-class sales and professional services organizations. This started after his departure as a corporate finance and accounting practitioner in 2000 so he could grow a startup to +425 employees and exit to IBM with a role of VP Sales Operations in 2010. During his stay at IBM, John held global roles running sales enablement, offering management and design leadership within the IBM Analytics division. He strives to lead clients to effectively use analytics to change the course of their business.

Top 3 automated risk assessment tools

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An abstract image depicting the importance of finding and implementing technologies to automate rote tasks in risk assessment

Managing potential risks in financial data is a monumental task. But thanks to the latest digital audit tools and AI audit software, automation is now revolutionizing this domain. Here, we delve into the top 3 automated risk assessment tools that are making waves in the industry.

The adoption of new risk management processes has been a focal point of discussion in the business world generally. But, financial institutions are particularly focused, lately, on updating their procedures and processes in a post-pandemic, largely remote world. While pandemic talk may sound like a broken record at this point, it’s still an important consideration, even as the world becomes vaccinated and business begins to open up. 

As businesses, we are not out of the woods yet.

Fortunately, new technologies spurred by automation are making it easier than ever for organizations to invest in more effective risk assessment tools. 

As a report from Deloitte notes: “Latest technologies have the potential to fundamentally transform risk management. In addition to substantially reducing operating costs, these and other technologies can provide risk management with new capabilities including building controls directly into processes, prioritizing areas for testing and monitoring, deploying automated monitoring of limits with defined escalation, addressing issues in real-time to improve the enterprise-wide view of risk, and providing decision support.”  

In addition to providing more efficient processes and a holistic view of risks facing an organization, improving the risk management function facilitates the detection and assessment of new risks that have emerged over the past decade. Cybersecurity, business model, and contagion risks are examples of some of the more recent risks that firms must now contend with. How an organization handles these risks can be the deciding factor on whether or not they sink or swim. 

Kristina Davis, a partner with Deloitte Risk and Financial Advisory, explained in an article: “Organizations that proactively construct advanced risk management capabilities to keep pace with transformative change have the opportunity to gain competitive advantages.”

Wondering where to start with updating your risk assessment processes? Here are 3 top tools to help your organization automate risk assessment.

3 tools to automate risk assessment

LogicGate: GRC in the cloud

 

As LogicGate describes it, they’re creating more than just software – they’re creating peace of mind with their automated risk assessment tool.

LogicGate provides cloud software solutions for automating governance, risk, and compliance (GRC) processes through its Risk Cloud platform. The software empowers organizations to change disorganized risk and compliance processes into enhanced enterprise risk management operations that increase efficiencies. 

What is GRC? According to CIO.com, GRC is a tailored way to align a company’s IT with business goals while also managing risk and meeting compliance obligations. In addition, a GRC framework can offer numerous benefits for organizations that take the time to implement one properly, such as better decision-making, improved IT investments, and the elimination of silos.

With LogicGate’s enterprise technology, process owners have full control with a no-code-needed app builder, pre-built templates, and the ability to craft workflows that suit their needs. The result is a customized solution that provides a comprehensive view of risk programs.

In an effort to make things even more flexible for users, the company recently expanded its integration offerings. LogicGate’s Risk Cloud now integrates with hundreds of platforms via the new Risk Cloud Connect, which works seamlessly with many core business systems, including Jira, Slack, DocuSign, and more.

 “We’re on a mission to give risk and compliance professionals a single source of truth to make better, more informed decisions with their data,” said Jon Siegler, LogicGate’s chief product officer, in a press release.

Fusion Risk Management: Resilience meets efficiency

Fusion Risk Management originated as an idea scribbled by its co-founders on a restaurant tablecloth. Since then, it has become a well-respected cloud-based software solution focused on operational resilience, encompassing business continuity, risk management, IT risk, and crisis and incident management.

The company aims to help organizations anticipate, prepare, respond, and, perhaps most importantly, learn in any situation by providing them with the risk assessment tool to be successful. And because every organization is different, Fusion’s integrated suite of platform capabilities can be custom-tailored to fit a company’s unique needs.

Fusion’s products and services take organizations beyond legacy solutions, enabling them to make decisions backed by data with a flexible and inclusive approach to achieve operational resilience and mitigate risks.

Fusion’s flagship offering is the Fusion Framework System, which allows organizations to maintain resilience through a single platform, thereby eliminating the need for multiple disconnected modules across various risk areas. The company also recently launched Fusion Analytics, a new system capability that allows users to compile all relevant and required data into a single platform, which helps eliminate operational silos and foster collaboration by allowing teams to work together from anywhere.

“In today’s highly competitive market, businesses must demonstrate they have a robust operational resilience program and can make important, difficult decisions fast, at the speed of business. This especially holds true during times of market turbulence and volatility,” Brian Molk, Fusion’s Chief Product Officer, said in a press release.

 

MindBridge: The future of automated risk discovery

At MindBridge, we’re all about changing the world and creating a better future for all by improving the global financial system – one organization at a time.

Since our founding in 2015, MindBridge has become the world’s leading AI-powered risk discovery platform for financial integrity. We’re here to help auditors, accountants, and financial professionals become more efficient and successful.

From transactional risk reviews to organizational process improvements, MindBridge users have the AI-embedded tools, visualized analytics, and comprehensive resources needed for more robust and holistic analysis, assessments, and advisory services.

So, how does it work? MindBridge’s Ensemble AI technology compares data against 28 capabilities, or “control points,” to identify the level of risk in 100% of transactions in a given data set. The results far outweigh what would be achieved by running each capability separately, which is why more than 8,000 firms worldwide use MindBridge’s platform, including well-established institutions like the Bank of England and the Bank of Canada, and major firms such as Dixon-Hughes Goodman and Cherry Bekaert. 

“Using MindBridge, we now have a standard way to do journal entry testing. And I feel a lot more confident about our selections now than almost any other method that we could come up with,” explained Jonathan Kraftchick, a partner with Cherry Bekaert LLP, of the firm’s adoption of MindBridge. “MindBridge is the future of auditing.”

And there you have it: 3 tools to automate risk assessment.

To read more on how other organizations have adopted MindBridge to improve their risk discovery, check out our case studies and customer stories.

To book a demonstration or hear from an expert, schedule some time with our team. 

PCAOB makes room for technology: What does it mean for auditors?

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An abstract image of growth and development to symbolize the adoption of new technologies and processes by storied firms and businesses.

In the last decade, technology has altered the ways in which we work and live. This has become increasingly true in the auditing profession. 

According to Audit 2025: The future is now, a report released by KPMG and Forbes Insights that surveyed 200 CFOs, chief audit officers, chief tax officers and other financial executives, “the financial audit is poised for profound and rapid change.” That is, technology, combined with the expertise of today’s skilled auditor, allows audit professionals the opportunity to take a deeper look into an organization’s financial facets and provide more informed insights.   

The Public Company Accounting Oversight Board (PCAOB), which regulates audits of publicly listed companies in the United States, recently released their own report, the Data and Technology Research Spotlight, which provides timely and relevant observations for auditors and stakeholders on the current and future of audits and technology-based tools being implemented in the industry. 

It’s a mouthful, but essentially those responsible for regulating public audits in the United States are beginning to respond and acknowledge the transition we’ve been tracking  (and encouraging) for a few years now: audit approaches using technology-based tools.

In the KPMG-Forbes report, 80% of respondents said that auditors should use bigger samples and more sophisticated technologies for data gathering and analysis. As technology blazes a trail through the audit space, more firms, organizations, and boards are taking notice.

Back to PCAOB report, it included an interesting statement on standards:

“PCAOB auditing standards do not preclude audit firms’ use of technology-based tools during an audit but our current standards do not explicitly encourage the use of such tools.”

While far from an endorsement, the PCAOB is the most recent major organization in the audit space to recognize the value of technology to increase the quality and efficiency of risk assessment and discovery.

In the same KPMG-Forbes report, however, 66% of respondents noted that the regulatory environment as their biggest challenge to enhancing the role of the auditor:

A graph from Forbes and KPMG showing poll data from auditors on what is holding them back from integrating technology into their methodology, and from enhancing their roles.

Source: KPMG & Forbes, Audit 2025: The future is now

In light of this report, and the reality of auditors and accountants, we asked ourselves, what does this mean for not only public companies, but organizations everywhere that are still on the fence about integrating potentially groundbreaking technologies into their audit work?

What does this mean for the audit industry?

The use of technology in audits is not new. Currently, many of the firms governed by the AICPA’s regulations and standards  use technology in their audit approach to help augment their audits and enhance their judgement. 

In the PCAOB report, the board considered that “guidance or changes to the standard may be needed, given the increasing prevalence of technology-based tools and the increasing availability and use of information from sources external to the company, both in financial reporting and as audit evidence.” 

Beyond the admittance of such “technology-based tools” into public audit, this also speaks to the need to update standards and regulations that may inhibit their use. This is a major step for any regulator as, historically, audit standards have struggled to reconcile the advent of tools that may increase audit quality and efficiency with storied rules that attempt to define a “quality audit.”

A full meeting room discussing a presentation on the utility of technology to augment audits and enhance the judgement of auditors.

The AICPA and ICAEW (covering North America and England & Wales, respectively) are two major regulatory and oversight bodies that are both grappling with their relationship to new and upcoming technological advancements in accounting. AICPA, through CPA.com, are planning for the introduction of DAS (the Dynamic Audit Solution), a solution that looks to combine technology and traditional audit to bridge the gap between innovation and regulation. 

The PCAOB’s stance on technologically-augmented audits has given fintech innovators—and the firms that employ their technology—room to breathe, and to consider their relationship with the long-established audit industry.

So, where do we go from here?

The PCAOB’s Digital Technology Spotlight did more than open the door for technology in public audit, though: it outright listed the benefits of digitally-augmented risk assessment for auditors, firms, and businesses everywhere.

Reports conducted like the PCAOB and Audit 2025 show that technology-based audits reap huge benefits for firms and businesses. One potential benefit noted in the PCAOB report posits that these tools provide auditors with more persuasive evidence and confident findings in their risk assessments. This corresponds with a finding in the KPMG-Forbes report which showed that 62% of respondents want their auditor to articulate a clearer point of view on critical issues. 

“62% of respondents want their auditor to articulate a clearer point of view on critical issues.”

Other benefits mentioned include automating certain aspects of repetitive or less complex audit procedures like reconciling account balances to the general ledger, vouching sales transactions to subsequent cash receipts, or preparing confirmations to be sent to third parties. 

With the positives mounting, it’s understandable why organizations like the PCAOB felt it necessary to take a stand on this issue, and to formalize it into their standards (albeit off-handedly). However, it was also interesting to see the benefits specifically tied to public audit.

For example, in certain instances, the PCAOB Spotlight found that technology-based tools can aid auditors in analyzing data for indicators of management bias and the ability to provide auditors with information that could even suggest revisions to their planned audit response. 

Many more benefits weren’t mentioned in the PCAOB Spotlight, however. Like what automating recurring tasks can allow auditors to do, such as expanding their skill set, and allowing them more time to communicate with clients and stakeholders. Nor did it mention the marketing potential for firms utilizing AI and other hot-button technologies, from a branding perspective. 

Ultimately, this report is yet another example of the wider audit and accounting community recognizing the value of technology and embracing it. Given that, you may be wondering how you, your firm, or your business can begin to leverage technology for the betterment of your audits.

Thankfully, we have you covered.

How to integrate technology into your audits

With the addition of technology to your audit methodology also comes many changes to the way data is collected, analyzed and controlled in your firm, department, or business. This can seem daunting; the idea of implementing new policies and procedures and updating a methodology that has been so good to you for so long isn’t easy. 

But this change is good.

A man reviews financial data for a client's audit.

As mentioned, utilizing technology in your audit assessment has taken a long road to regulatory acceptance; technology moved too quickly to be tested and proven against the manual means of gathering and analyzing data — the person behind the calculator punching numbers worked, it seemed. However, now that both private and public regulatory boards are starting to recognize the power that using technology-based tools have in conducting audits, there is no reason not to accept the future of audit: technology.

The MindBridge Audit Approach works to empower auditors and finance teams with AI-enabled technology to automate tedious processes and provide deeper insight into financial data. 

From the planning, gathering, and analyzing stages, MindBridge’s technology allows users to analyze 100% of transactions to spot anomalies and potential risks faster. We appreciate the importance of understanding 100% of the process as well. 

It’s like cooking: you need a great recipe to make a great meal. If you go in blind, you may not like what comes out of the oven.

Audits should be treated with the same transparency, thoroughness, and detail. Which is why the MindBridge Audit Approach requires an understanding of your business and objectives, conducting preliminary risk assessments, evaluating internal controls, and building a plan for successful audit engagements.

Our Audit Approach Briefing Paper offers you a practical introduction to revamping your audit approach using MindBridge.

Download the MindBridge Audit Approach Briefing Paper today

Tech-driven audit approach: What you need to know

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Audit data going through technology

Deciding on the best audit approach isn’t a cookie-cutter process. While a long-standing relationship with a client or in-depth industry knowledge can give auditors a leg up, defining an effective audit approach requires careful consideration and planning for every engagement.

After all, your audit teams understand that every client is unique. So, deciding on the best ways to approach an audit will be too. Everything from the client’s objectives and business operations to known or unknown risks, internal controls, and much more will determine how you and your team go about any particular audit.

However, there’s something else you may need to think about that often goes unmentioned: the role of technology in your audit approach.

As this pandemic continues to propel widespread digital transformation and standards evolve to embrace new technologies, there is a growing need for auditors to consider updating their audit methodology too.

After all, a tech-driven audit approach can not only help auditors work more efficiently, but it may also allow them to deliver greater value to their clients. Whether it’s AI auditing software or other financial automation tools, technology serves to complement traditional auditing processes and lays a foundation for even better financial insights over time.

How does a tech-driven audit approach differ from a traditional audit?

A tech-driven audit approach considers the use of technology right from the get-go. It means there’s already some level of buy-in from management about auditing technologies, so your people are trained on the tech you’re using. You might even have data handling processes set up to fully leverage the capabilities of the new auditing solution.

While reaching this level of technological adoption might seem overwhelming, it shouldn’t have to be. With a little support on your side from the right vendor and a solid change management plan, you’ll be able to easily trial new technologies and reach higher levels of adoption at your own pace.

Then, as you go into new audit engagements over time, it’ll become second nature for you to think about the role of technology, how it will complement your existing methodologies, and how it may support your resources. From the planning stages right through to completion, you’ll consider how to automate manual tasks, get extra validation and assertion, and perhaps even uncover new insights that are buried in the mounds of client financial data.

In other words, implementing a tech-driven audit approach means you’re thinking ahead about how to best use the technology to deliver a quality audit. And you’re identifying the specific procedures or tasks where the auditing technology will be most beneficial.

What are the key factors to consider in a tech-driven audit approach?

Defining a tech-driven audit approach isn’t entirely different than a traditional one. It just requires another layer of consideration about how the technology fits into your methodologies. Below, we’ll explore what a tech-driven audit approach might look like and the areas where technological considerations can be made.

Understanding the client’s business and objectives

Whether you use technology in your audit or not, getting to know your client is a given. You’ll need to consider the industry they’re in, their business operations, their audit objectives, and other unique factors that pertain to the organization to achieve an effective assessment.

When defining objectives, it’s also important to consider those beyond the financial statement audits too. In fact, in a recent Deloitte report, 95% of the 351 c-suite, finance, and audit committee executives polled said that audits should provide additional value beyond an independent report on the historical financial information. Essentially, clients are looking for deeper insights, analysis, and recommendations.

When you implement a tech-driven audit approach, your audit team will be able to automate manual tasks and work more efficiently. That’ll allow you to assign extra resources to added-value services such as helping your client uncover new insights. Using technology, you’re essentially able to broaden your service offering and point your clients towards new opportunities that will positively impact their business.

At this stage, you’ll also need to understand what financial software your client is using and how you’re going to best access the information you need. With all this in mind, here are a few questions to ponder to map out your tech-driven audit:

Conducting the preliminary risk assessments

Identifying risks of material misstatement and their relative significance is an integral part of defining your audit approach. Because when you have a good understanding of the potential risks at play, you’re better able to plan for and execute a comprehensive and high-quality audit.

At this stage, auditors will look over balance sheets and income statements to spot any obvious inconsistencies. They might also dive into subledger data and run some preliminary testing on journal entries. The challenge here is that a traditional audit approach will leave so much data untouched and unexamined.

In a tech-driven audit approach, this is a key area where your audit technology can really make a difference. For instance, if you’re using an AI auditing platform, you’ll be able to test 100% of your client’s financial data and dive into accounts receivable and accounts payables subledgers  to see if any other anomalies stand out. This allows your team to conduct a deeper level of preliminary risk analysis and potentially uncover risks that weren’t on your radar.

Consider the following on risks assessment when building a tech-driven audit:

  • How can you use your auditing technology to get a clearer picture of the financial risks?
  • Does your technology allow you to filter results and dive into your client’s financial data to get a better understanding of those risks?
  • If you save time by automating risk assessment procedures, where else can you apply resources to offer your clients more value?

Evaluating the company’s internal controls

Evaluating the effectiveness of the company’s internal control over financial reporting is another critical component in your audit. Your auditors will likely perform a series of tests to validate how well internal controls are being upheld within the company.

In a tech-driven audit approach, the technology can either complement or replicate manual testing procedures to achieve higher levels of assurance. The technology might also point your team to riskier data that will then open up new conversations with your clients about potential weaknesses in internal controls.

For example, our AI auditing software automatically identifies control points to spot high-risk transaction data. The auditing team can also adjust these control points and use other capabilities within the platform to recreate traditional control testing models.

All of this will allow your team to move forward with greater confidence in the audit engagement while ensuring high levels of accuracy and diligence. Here’s more to think about:

  • Does your technology complement internal control testing or replicate manual processes?
  • What control testing models can you effectively carry out using your technology?
  • Can you adapt control points and testing to different clients and industries?

Building the plan for the audit engagement

Putting together the audit plan outlines why, how, and when you’re going to execute the audit procedures. These include everything from the planned nature, timing, and extent of risk assessment procedures, controls tests, substantive procedures, and any other relevant audit tasks.

When putting together the audit plan, an auditor will usually provide examples and reports that justify why certain procedures will be critical for the audit. In a tech-driven audit, it’s important to consider how your technology can back up your findings and assessments and help you build a more complete plan.

This could include exporting powerful visual graphs and data that support your audit plan and substantiate the details of specific procedures. Ultimately, this gives the client a snapshot view of where the auditors have identified risks and why certain procedures are warranted.

Here are some tech-focused questions to consider when creating your audit plan:

  • Does your technology allow you to easily export information to build a better audit plan?
  • Can you customize graphs or visuals to support the findings of your preliminary risk assessment?
  • Can you easily share information with your client to help steer conversations about the audit plan or other potential opportunities?

Are you ready to embrace a tech-driven audit approach?

The role of technology in audits is growing every day. More auditors are not only embracing new tools such as AI auditing software to support their audit strategies, but industry standards are also evolving to accommodate higher levels of automation in audit practices. Even the AICPA has announced the ‘Dynamic Audit Solution Initiative’, promising to create a new, innovative process for auditing using technology.

Auditors who stick with the traditional audit approach for fear of change are going to be left behind.

If you’re ready to implement a tech-driven audit approach using AI auditing software, know that the partner you choose can make all the difference. At MindBridge, we support our clients through the technology adoption process and offer value-add services that help you reach company-wide success.

Want to hear about what it’s like transitioning to a tech-driven audit approach? Read how Dixon Hughes Goodman LLP (DHG) embraces the power of AI to move their auditing practices forward.

Should you update your audit methodology?

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Should you update your audit methodology? | MindBridge

Does your audit methodology need a facelift?

When most people think of an auditor, they picture someone working away on a calculator with a gigantic stack of paper beside them. Invoices, transactional documents, payroll documents, let your imagination run wild. The point is, there’s always a stack of paper, albeit some have started to become digital in form. But, what if an updated audit methodology and audit process could change that?

But just because something was popular once, definitely doesn’t mean that it’s the best way to go about things. Take Pet Rocks for example. Tell me with a straight face that Pet Rocks were a good idea.

Audit best practices and compliance are constantly evolving, especially as data sets increase, remote audits become more prevalent and regulators/standard setters look for more analytically driven procedures. This also means that maintaining SALY (Same as Last Year) will challenge firms in staying relevant to their clients, risk of client acquisition or retention, and have peer reviews/inspections/audits scrutinized more thoroughly. To continue to offer clients top quality audits and risk assessments, add new value to their clients and win more business, auditors should routinely evaluate their audit methodology and process.

Here are just a few points to keep in mind if you’re on the fence about updating your audit process.

Audit evidence standards are modernized

Now is the best time to work on new engagement models, modernization and change. Sure it can be hard, we hear you, but the reality is that the industry has moved, and it’s to be expected that firms and individual auditors will need to keep up.

The American Institute of CPAs (AICPA) recognized that fact when it released the Statement on Auditing Standards (SAS) No. 142 Audit Evidence in July 2020. The new audit evidence standard, which takes effect for financial periods ending on or after December 15, 2022, modernizes private company auditing standards and includes significant updates around how technology and automation can be leveraged throughout the audit process.

“Our substantially revised standard addresses the evaluation of audit evidence and has been modernized to reflect our current business environment,” explained Bob Dohrer, CPA, CGMA, AICPA Chief Auditor, in a press release. “It recognizes the use of automated tools and techniques such as audit data analytics, AI, and remote observation tools to obtain audit evidence.”

With so much of the audit process tightly wrapped up in regulation, this new standard represents a huge step toward the future of the audit industry and acknowledges the ever-evolving nature of business.

For more detailed information on this new standard and what it means for your business, check out our blog, “How the new SAS-142 audit evidence standard embraces technology and automation.” 

AI won’t replace auditors

When it comes to implementing new technology into your audit methodology, you might be thinking, ‘But what about my team?’

Since the dawn of technology, there has been apprehension about robots and machines replacing jobs done by humans. But here’s the thing: artificial intelligence will not replace auditors, but auditors using AI will replace those who are not using it. In fact, data science can augment an auditor’s experience and judgement.

Now, there is reasonable concern around AI’s ability to conduct an effective audit, and whether or not regulators are going to embrace these technologies as sources of high quality risk assessment and evaluation. But, as the revised ISA 315 audit standard shows, regulators are inching closer to the adoption of industry-changing technological changes, such as integrating data analytics into the formal audit process.

It’s safe to say that accounting and audit firms that embrace new technologies will dominate the market. The bottom line is that AI is about task replacement, not human replacement. 

Want to learn more about how auditors are using AI?

Watch the on-demand webinar now

The continuing implications of COVID-19

Before the global COVID-19 crisis, technology and automation were already on their way to becoming the future audit process norm.

However, the global pandemic underscored the need for the audit industry to more readily utilize new technologies. COVID-19 made change unavoidable and advanced the future of auditing and disrupted a long-standing complacency that had settled over the audit industry

While the pandemic may be temporary, many of the changes it has brought will be permanent.

There’s no question that COVID-19 has transformed how many firms will work and collaborate going forward. Since more teams are working remotely, a cloud-based AI auditing platform can simplify data sharing and ensure cybersecurity best practices are in place for the new norm of remote audits.

With AI-embedded auditing tools like MindBridge, customers can experience a more streamlined and integrated audit and risk discovery process.

It’s also important to keep in mind that just as your team is working remotely nowadays, so too are your clients’ teams. Providing a remote-friendly audit approach means your firm will be more relevant to current and potential clients, which, in turn, gives your firm a competitive advantage. 

An updated audit methodology can add value for clients

Businesses have traditionally seen audits as simply a compliance exercise, and that auditors merely verify if financial statements comply with standards, and find out whether or not their transactions look risky.

However, that perception is changing, and clients are now expecting more services than a calculator and Excel spreadsheet can offer.

Financial technology and automation have given rise to a component that’s changing the audit field: insights. AI-embedded audit tools allow for detailed risk assessments and insights, which provide added value to a client and result in higher quality audits altogether.

The future of auditing will have a heightened emphasis on exploring data trends, studying risk characteristics, and real-time transaction analysis. With these capabilities, auditors can gain a deeper understanding of their clients’ financials. At the same time, clients have greater confidence in the audit process. 

When it comes to audits, clients now want more than a rear-view mirror perspective. They want to know what to keep an eye out for.

That’s why diversifying your firm’s offerings will be fundamental to longevity and growth in the future world of audit. Adopting an AI-embedded risk discovery and audit procedures not only makes audits more effective and efficient, but also allows for expansion into advisory and transaction services. Modifying and diversifying services adds incredible value for clients and can lead to a more regular income stream for firms, not to mention smoothing your delivery timing and ridding teams of rote and menial tasks. 

Embracing change in your audit methodology

Let’s be honest, not everyone embraces change. It can be intimidating; it’s new and unknown. It can take a lot of effort and planning to put something new into action. But more often than not, change is beneficial. 

Evolving and implementing new practices is an essential part of doing business today. It’s safe to say that a retail business that doesn’t utilize technology to have an online presence would most likely fail in the marketplace today (let alone tomorrow).  

Of course, updating your audit methodology doesn’t happen overnight. It can be a long and tedious process that may even require some research on change management best practices. An important aspect of changing your audit methodology is finding an approach that’s right for your team.

At MindBridge, we can help you develop your new audit process that meets both your needs and the needs of our clients. While there are many unknowns about the future of audit, one thing is for certain: AI will be a part of it.

Want to learn more about how AI is reshaping the audit industry? Register for our on-demand webinar “Demystifying artificial intelligence and the impact on auditing.”

Will DAS (the Dynamic Audit Solution) change the audit industry?

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A paper boat on paper water, symbolizing whether or not programs like the AICPA Dynamic Audit Solution will hold water.

The audit industry has seen a bit of a shakeup in the past few years. New technologies, regulator crackdowns, big firms acquiring and merging, and a general push for improved processes and a review of age-old standards are all signs of new things on the horizon for our industry. But while there was a lot of talking, we didn’t see much walking. 

But, all that changed, at least for auditors, with an announcement from the AICPA in 2018.

Nearly three years ago, the “Dynamic Audit Solution Initiative” was announced. Projected to release in 2021, the Dynamic Audit Solution, or “DAS,” as many in the industry affectionately call it, is a “multiyear initiative to create a new, innovative process for auditing using technology.”

As the beta release approaches, we wanted to take a look at the Dynamic Audit Solution in more detail. As a pioneer in AI-powered risk assessment, MindBridge is highly invested and interested in any and all innovations in our space. When it comes to DAS, we want to know what it is and what it means for us and our industry.

In this article, we’ll answer those questions and consider what the impact of a Dynamic Audit Solution might be, for better or for worse.

What is DAS (the Dynamic Audit Solution)?

We don’t know a lot about the Dynamic Audit Solution, but what we do know is exciting. The AICPA sees DAS as the next step toward the future of audit and assessment by leveraging technologies never before seen on a large scale. That, obviously, has a lot of people excited.

There aren’t a ton of details on what exactly the AICPA’s DAS will look like. We haven’t seen any product screenshots, and the core functionality hasn’t been mentioned in any major press coverage. 

But, there are a few key aspects of the technology that have been announced, as well as some information on what the team behind the product are considering as they are building it.

AI, automation, data, and AICPA

At its core, the Dynamic Audit Solution will be an AI-powered product. In an interview with AccountingToday, Matt Dodds, CEO of CaseWare, one of the organizations involved in the project, made a point to note that “the solution is driven by data analytics and AI.” The idea here is that artificial intelligence capabilities will allow auditors to process more data more efficiently, allowing them to create higher quality audits in a fraction of the time.

It isn’t quite clear what areas of the audit solution will include artificial intelligence, or how the AICPA auditing standards will regulate and legitimize control points, risk assessments, and other key factors to a quality audit. But, the need for AI to process increasingly complex and large data sets is clearly at the top of the priority list for the AICPA. As are data analytics.

According to the AICPA, the Dynamic Audit Solution will require “audit professionals become conversant in data science, data integration and analytics.” Essentially, artificial intelligence and automation will allow auditors to become experts in the data that they spend so much time analyzing. Once that data has been processed, though, auditors will be able to better understand and communicate the results of an audit to clients. 

As the traditionally manual tasks of an audit are automated, audit professionals will be afforded more time to converse with clients. This will allow auditors to offer clients a true assessment of the audit findings, while also expanding into a more continuous audit through advisory and consulting services, avoiding independence issues wherever possible.

All of that being said, what does the Dynamic Audit Solution mean for auditors themselves, and for the industry largely?

What does the release of DAS mean for the industry?

The Dynamic Audit Solution is going to mean different things to different people. For auditors, it means a potentially new technology to help them create more efficient and quality audits. In theory, that is. As well the automation of certain audit tasks will allow auditors to become data science professionals, consultants, and any range of financial experts to help their clients better understand their data and assist them in their endeavors. 

But, such a large scale release of an AI-powered solution has industry-wide effects as well, which the AICPA have outlined.

Technology is considered to be one of the four “key drivers” of the DAS project, according to the AICPA. The other three are Methodology, Standards, and New Skills. Artificial intelligence is at the heart of the Technology driver, but is also the reason that the three other drivers are mentioned at all. 

As the AICPA introductory document to DAS notes, audit methodologies, standards, and skills will need to be reevaluated and evolved to meet the demands of artificial intelligence. This means that, as an industry, we are potentially looking at a large-scale overhaul of the AICPA auditing standards, regulations, and methodologies that we’ve come to know over the past 100 years. In fact, some of these revisions are already in motion.

While it might be scary to some, this evolution was all but inevitable, hence the push by the AICPA to introduce DAS in the first place. In fact, in many parts of the world, organizations like the AICPA are being pressured to revise regulations and standards to meet the needs of today and tomorrow’s audit professionals. 

While many have feared the advent of new technologies in the face of storied regulations and standards, large organizations like the AICPA are helping to fix that by entering a new age of tech-driven audits and accounting services.

The question is, can it be made to work?

The Dynamic Audit Solution: A new hope?

Everyone seems to have a different opinion on the Dynamic Audit Solution. Whether or not you think it will work depends on your perspective, and what outcomes you want to see from it. But, as the development process continues and feedback is given, ultimately, the Dynamic Audit Solution can be made to work, even if some of our fears come to fruition.

We’ve outlined what the AICPA and their collaborators hope to achieve with DAS, including automation of rote tasks, expansion of service offerings from auditors and firms, and a revision of AICPA auditing standards and methodologies. What these achievements mean for various auditors and firms will surely vary, so it’s hard to say whether or not the DAS will “work” for everyone, so let’s talk about whether or not it can achieve what the AICPA hopes it will.

The AICPA is an important and storied institution in our industry. It has been a stalwart of standards, regulations, and a representative for CPAs everywhere since its founding in 1887. But, that might be exactly the problem. 

Old dog, new tricks?

While the Dynamic Audit Solution is a great sign of evolution in our industry, it’s a little late to the party.

MindBridge, along with many other innovators in the audit and accounting industry, have worked on this for a long time. We know the market, we know the challenges, and we know what it takes to create a robust product that services not only the auditors on the front lines, but the larger firms, businesses, and stakeholders that invest in technology. 

We had a running start, while DAS is still at the starting line. We understand that agility and flexibility are necessary to address user needs, and delight our evolving industry with a tight feedback loop, among other considerations that come with time, practice, and experience.

Companies like MindBridge are ultimately closer to the needs of enterprises and stakeholders in the audit industry. These are the people pushing firms to do more with less, and produce more effective and high quality work with less resources. We understand the struggle in the market in a way that the AICPA and other organizations may not. 

Part of the challenge will be to establish systems of review in order to meet the needs of an ever-evolving industry. The AICPA is a storied organization that may find it challenging to balance procedure with market need.

Even still, it may be even more difficult than that.

As a standard setter in the audit industry, the AICPA may find themselves in an awkward position with regulators and other standards enforcement agencies.

Audit Standards vs. Innovation

Comparatively, standards setters have been historically less agile than innovative and tech-forward firms. Large organizations have enough hurdles to jump over as is, without being the literal standard setter pushing back on these technological developments. 

The AICPA’s involvement with regulators and imposing audit standards poses a unique challenge to the development, release, and review of a Dynamic Audit Solution. As they mention in their own Introductory Document for DAS, the AICPA anticipates an upheaval of standards and regulations that have inhibited the use of AI-powered technologies for audit in the past. 

It will be interesting to see how a standard setter like the AICPA can build a tool and roll out their procedural recommendations at the same time. This brings to light questions around feedback and updates, and whether or not large organizations are flexible enough to meet the needs of our ever-evolving industry in a timely manner.

At the heart of this is the ability for tech firms to move quickly, update and adjust to new risk factors, changes to normal business processes, and therefore stay ahead of the standards curve. 

Can the standard setter balance that need for speed and agility to enhance client satisfaction while also delivering on software changes needed for a dynamic business environment?

DAS will bring us a long way with standards that embrace technology. However, we will want to make sure that the AICPA focuses more on standards agility to help their members impact and delight the outcomes for the entities they audit.

We will have to wait and see what becomes of DAS in light of current or amended standards, but it’s more than valid to suspect that the industry-wide perspective shift may take some time.

DAS, and the future of audit

Ultimately, the AICPA’s investment in AI and data analytics, and the development of the Dynamic Audit Solution as a result, is exactly the type of thing our industry needs. Big players like the AICPA need to step up and embrace technology, and look to the future of audit and accounting more generally.

At MindBridge, innovations like these make us hopeful for the future of our industry, and have convinced us that we, and our peers in the industry, are having a marked impact on the present and future of audit and accounting.

As our Founder, Solon Angel, notes in his own article on the Dynamic Audit Solution:


“The bottom line is that artificial intelligence is being considered by all players, and this is something that I welcome with open arms. No matter how small or large the investment, every hour or dollar spent works to improve our industry. In light of recent fraud cases around the world, there is a clear need for as many initiatives as the Dynamic Audit Solution as possible, using different AI approaches is better than the status quo.”

We couldn’t agree more. We’re looking forward to the release of the Dynamic Audit Solution to make us better and challenge us to continually improve, evolve, and engage with our expanding client base. For more articles on the audit and accounting industry, visit our blog here.

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Embracing technology as a CFO in 2020

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internal audit and risk

CFOs continue to be one of the most important resources to their business. In the last 20 years or so, they have spent countless hours working through regulatory and reporting changes, implementing new systems, and partnering with other leaders in the business on analytics. Through all this, they also have to come up with new ideas to find funding and preserve revenue streams, and maintain the fiscal discipline that CEOs and boards have come to expect.

How can CFOs and their teams balance these needs against higher fiscal scrutiny, cost cutting, and changing work environments?

The answer is to bring longer-term thinking up front, to measure, plan, and execute on our new environment now and get comfortable with the new normal.

CFOs here and now

Many companies are shedding resources and re-aligning their operations to protect their core business, while also hoping to make themselves indispensable to clients. Some are successful while others are struggling to adapt and find themselves trying new ways to look at cash flow, going concern ratios, and most importantly, customer engagement and retention.

This is only natural as the global economic slowdowns and supply chain uncertainties mean that CEOs and boards are tasking CFOs to review all expenses. These short-term projects start with salaries and travel expenses and follow with software subscriptions and other suppliers. While these are good actions to take, they don’t necessarily prepare the organization for the new normal, when people are returning to work, supplies start shipping again, and customer expectations have shifted.

CFOs must build a longer-term strategy into their short-term goals.

Another key consideration is the rise in fraud. According to the latest ACFE Report to Nations 2020, we know that up to 5% of top line revenue is lost to fraud around the world. There’s an expectation that COVID-19-related business and personal stressors will eclipse that figure quickly if we’re not careful.

To evolve beyond the short-term and reactive decision making now, organizations must buckle down and work through their long-haul strategies. From a CFO perspective, this could be:

  • Assessing the level of granularity on reviews and reports
  • Identifying areas of the business to trim or reduce
  • Determining any new risks for the organization to consider
  • Understanding how quarterly reporting, audit, and governance cycles will change

Preparing for post-crisis business operations

As former CFO, Shaye Thyer, posted on LinkedIn: “I would have given my left leg to have access to some of the amazing tech we have now.”

It’s not easy for business leaders and their teams to shift to the new normal and that’s where strategies, people, and tools must come together.

How does this differ from leadership advice in the past?

Rather than focus on reactive measures that use traditional processes and historical data, leaders must plan and strategize updates to their finance organization that take advantage of today’s unique opportunities to outpace the competition. This also means understanding the changed expectations of employees working in a different environment to keep them satisfied, motivated, and productive.

This could mean taking stock of internal remote working situations, and that of clients, to build them into new strategies. Augmented working environments open up a wealth of opportunities for collaboration, communication, and value creation. As this Forbes article states, returning the 2.7 billion people affected by lockdowns and stay-at-home measures could mean that, “While some employees will return onsite, others may continue to work remotely or engage in a hybrid model. In addition to arming workers with the skills and access needed to meet work requirements, re-engaging the workforce will involve assigning meaningful work.”

A big piece of this puzzle will be tools that adapt to these shifts in working models and leverage those changes to open up new opportunities. Moving to a digital-first strategy is key, as it will help teams collaborate better and remove as many manual steps as possible. This should cover everything from payables and receivables processes, such as getting all contracts signed digitally, to working on the assumption that travel will be limited.

Some offices are moving away from physical locations to hybrid models or even full remote working. Whatever each firm decides to do, there’s no question that professions are changing:

“Three elements of our practice have changed forever: the unprecedented move to a virtual practice, the client experience and our relationships with traditional office real estate.”
– Gary Shamis for Accounting Today

The bottom line for CFOs

To prepare for the new normal, I recommend these steps:

  1. Perform a full review of your tech stack and tools to see what needs to change for a post-COVID business model. This includes seeing where AI can fit to empower your teams and bring value.
  2. Start thinking digitally and how to support vendors, customers, and other stakeholders that are making their moves now.
  3. Prepare for a new way of working together on financial reporting from a distance, and evolving audits to be completely “touch free”
  4. Identify risks, especially potential fraud opportunities, and shore up the team with tools that augment their data assessment capabilities and provide deeper insights than traditional descriptive analytics technology

Since my start in this space over 20 years ago, we’ve had a number of times where we’ve relied on the CFO more than any other C-suite executive. This time around, we need to augment the Office of the CFO with state of the art technology, new normal of workplaces (virtual or not), and trust the professionals to take us into new strategies. We need to continue to be lean, execute extremely fast, and ensure that our strategy includes insight-driven tech (such as AI) and become digital in all that we do.

 

To see why finance teams trust MindBridge, watch this 4-minute video now

 

CPA Firm Taps MindBridge Ai’s technology in Audit as a Competitive Advantage

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internal auditing software

An interview with Lisa Zimeskal, CPA, Partner, Hoffman & Brobst, PLLP

According to a survey from the International Federation of Accountants (IFAC), smaller accounting firms are facing significant challenges. Attracting new clients, keeping up with new regulations and standards, and cost pressures versus competitors, were among the top concerns of these firms.

To combat these challenges, Hoffman & Brobst, PLLP, a firm of five partners, decided to embrace artificial intelligence (AI) in their audit services, as a differentiating advantage for their clients, and the firm now use the extensible MindBridge Ai Auditor platform in their audit process.

Ai Auditor is an award winning platform that empowers auditors to detect anomalies in financial data, with speed, efficiency and completeness. The platform leverages expert taught machine learning and AI to ingest and analyze 100% of financial data, as opposed to traditional sampling techniques, to provide higher assurance along with cost savings. Armed with greater insights and boosted efficiency, auditors can focus on what matters most – providing higher value-added services and guidance to their clients.

John Colthart, VP of Growth at MindBridge Ai, recently spoke with Lisa Zimeskal, CPA, Partner, Hoffman & Brobst, PLLP about how AI tools can benefit small firms. Here’s what she had to say.

John Colthart: Tell us about Hoffman & Brobst, PLLP.

Lisa: Hoffman & Brobst, PLLP is a full-service accounting firm in Southwest Minnesota. We provide audit, tax preparation, compilation and review services, in addition to payroll processing and third-party retirement plan administration services.
John Colthart: What do you see as your biggest opportunity?

Lisa: Our biggest opportunity is the continued growth in our industry. We are embracing growth in our firm and we are looking to expand our services when the opportunities arise.

John Colthart: What do you see as the biggest threat or challenge?

Lisa: Our biggest challenge is attracting qualified staff to our practice because of our rural location.

John Colthart: How do you plan to address it?

Lisa: We are currently looking into more options with technology for a remote work environment.

John Colthart: What made you choose MindBridge Ai Auditor? What are the features that you plan to use?

Lisa: We chose MindBridge because we are excited about offering a new value-added service to our clients. This is cutting-edge technology, and it is not something in which others in our area are participating. The entire concept is new to us, but initially, we are planning to leverage the risk-based assessment of transactions. This approach will be enable us to review by-transaction risk in a much more effective and efficient approach than we currently utilize.

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